Convince Investors to Fund You Page 4

  “The slide is too complicated. The eyes don’t know where to look,” I said to my client, Stephen.

  Like a number of clients, Stephen was tangled in details.

  Too much detail on a slide creates mud and confusion.

  Worse than that: such a slide misses the opportunity to gain an Immediate Yes.

  By Immediate Yes I mean, that you want the investor to have subconscious thoughts like:

  Yes—this look good; I’m interested

  Yes—this person in front of me is a pro—it’s worth listening for 20 more minutes—at least.

  Yes—I’m in! (unless something changes the investor’s mind)

  Industry pro and original TV Show Shark Tank celebrity/investor Kevin Harrington tells the story of giving the shortest presentation. The top real estate investor said, “Don’t sit down. Tell me why I should let you sit down.”

  Kevin responded, “I have something for you that would take four hours of your time and make you $4 million.”

  The top real estate investor said, “Sit down.”

  I share the above example to illustrate how little time you have to impress an investor so that person engages with your presentation or slide deck.

  Research demonstrates that people practice rapid cognition and thin slicing. To describe this briefly: People make a quick decision on a small bit of information.

  Years ago, I gave the speech “First Impressions: The 4-Second Barrier.” I do not use that title any longer. Why? It’s 2 seconds or less now.

  Your first slide must capture the investor’s attention in 1 second or less.

  The first slide must be simple, compelling and inviting.

  Just as important: Customize the slide deck based on the specific type of investor you’re addressing. As I work with clients, we develop different slides decks that we color-code. The slide decks differ related to:

  Impact investor?

  Obsessed with sustainability?

  Only interested in TAM (total addressable market) and other financial considerations?

  We’ll use the GREAT-SIGN Process to help improve your slide deck.

  G – give the emotional hook

  R – remember it's a show

  E – engage their eyes

  A – ask for what you want

  T – tell the story

  S – set the meaning

  I – identify The Power of 3

  G – get research to paint the picture

  N – Nurture if-then patterns

  Give the emotional hook

  The first slide must grab the investor’s emotional attention. As I mentioned, you need to get Immediate Yes. Why? Researchers have noticed the effect of rapid cognition. That is, people make a decision of yes or no with quite little information.

  What are we talking about?

  The person decides …

  Yes—this makes sense. I want to know more.

  Yes—I like this person giving the pitch. They seem worth listening to.

  Yes—this is a Big Idea*. I’m interested.

  We’re talking about how people are moved by emotion then later justify based on the facts. You need to identify what is most important to the investor and then design the first slide to move the person’s emotions in your favor.

  * When I say Big Idea, I focus on unfair advantage, disruption and big profits.

  Remember it's a show

  Often as I work with a client, I remind them that in order to get someone to say yes, we need to remember this principle: It's a show. People respond to entertainment and to that which moves their emotions.

  Unfortunately, many novice company founders try to begin their pitch with mere logic, facts, graphs, tables and pie charts. All of that is support.

  On the other hand, it’s reported that Steve Jobs focused on the vital ideas, and he did not start with a PowerPoint app as he formed his speeches. Instead, he began with the freedom of using pencil and paper.

  Be sure to focus on simple emotion-grabbing elements.

  Engage their eyes

  Choose what you want the investor to focus on first.

  I say to my clients: “Guide their eyes.”

  I’ve developed a process I call the First Time Viewer Monologue. I’ll look at a client’s slide and vocalize what I imagine is flowing through the first-time viewer’s mind.

  I’m looking to imagine what the first-time viewer is thinking and feeling as they get their first glimpse of a slide.

  It sounds like:

  “What’s this about? Oh, it’s an app. What for? To help people ____. That’s okay. Nothing special. Is there anything going on here that disrupts the industry? Oh, here’s a detail. Why didn’t they put that front in center? Are these guys sure about what they’re doing? Are they pros?”

  I’ve noticed that several my clients begin with a rough draft of the first slide that is too complicated.

  I’ll comment: “It’s too complicated. Their eyes don’t know where to focus. We must direct the investor’s eyes to focus on what we want them to see in the first half second that they encounter this slide.”

  Ask for what you want

  I’ve noticed novice company founders faltering during their pitch because they fail to say exactly what they want.

  If a founder fails to be forthright and say something like, “We’re raising $400,000 and with that we will accomplish these milestones…” investors may conclude that the founder is not really CEO material. They may also conclude that the founder does not have a CEO’s approach, strength, and trustworthiness. The CEO must lead. To lead you must be able to say, “This is what we need. This is what we want. And this is what we’re going to do with these funds.”

  It's better to say, “For our first round of funding, we need $200,000 to accomplish ____. At the level of half million, we can also accomplish A, B, and C.”

  I often suggest to clients that offering two levels of your “ask” is helpful because your listener has two choices to entertain.

  Tell the story

  Human beings are conditioned from our childhoods to respond to a story. Every image in the slide deck tells a story if you’re doing the process correctly. It’s truly important to pull out the meaning and make it clear to the investor viewing the slide. Do not expect the investor to make the leap of logic to know what’s most important about a particular graphic.

  I’ve advised some of my clients to show the bar graph and then to use a dialog balloon that states the point in a clear, brief way. It can be a simple statement of: “This opportunity centers on ______, which opens the door for big profits.”

  Set the meaning

  Do not let your slide be vague. You’re the one who must set the meaning. Why? We know that investors spend so little time per slide. How do we know this? When my clients use docsend.com, they have seen data: An investor would spend 4 seconds on one slide and then perhaps 15 seconds on a different slide.

  You cannot let the investor potentially come to the meaning on their own. You need to be clear and compelling.

  How? Title the slide in a vivid and enticing way.

  For a closing slide, this title “Why We Win” grabs attention.

  If you use a graph, tell them the crucial point.

  You could have the words: “We see that only __% of the target market use this ___ item. Our competitors are missing the opportunity of ______.”

  Identify The Power of 3

  Frequently, with my clients, I emphasize The Power of 3. Avoid having more than 3 key details in the slide.

  It’s even better if there’s only one main element. You’ll find power in a well-designed question.

  For example, when instructing Stanford University MBA students, I first said, “Women live longer than men.”

  I noticed a couple of male students in the back of the room with scoffing expressions on their faces.

  I then used a question: “Why do women live longer than men?”

  To the MBA students, I illustrate
d that a question gets the viewer to use a different part or his or her brain.

  The same pattern can be utilized in a well-designed slide to access the part of the investor's brain that you want to.

  You can ask a question that can facilitate the Moment of Aha. That’s when the investor comes to a sudden realization about a detail.

  We focused on bringing things down to the simplest elements. So, I frequently say, “Let’s use The Power of 3.”

  Use the Power of The Moment of Aha … The Moment of Discovery

  Whether it’s your first slide or when you’re delivering a 20-second pitch while you’re networking with an investor, you really need to facilitate them having an Aha Experience.

  You want them to feel: “Oh! Wow! That’s new. I never saw that possibility before. That’s good!”

  For example, I recently had an Aha Experience while talking with a friend. He made a comparison between something unfortunate and something extraordinary.

  His tone was dark and down as he talked about how somebody, “Stephen,” did a business transaction, while he was thinking, “I’m trying to get something for the least amount of money that I can.”

  Then my friend said, “I have a new system in which people have a completely different experience. The people exchange value, but they’re doing it in the situation of full gratitude and full appreciation. No one is trying to get more out of the other person than they’re giving.”

  Boom! That’s when I had the Aha Experience. At that moment, I said, “I’m writing this down.” I paid full attention. Think of it: full gratitude and full appreciation.

  Earlier in this book, we noticed that Bill Reichert said that the pitch-maker needs to get the investor’s heart beating faster. How do we do that? We facilitate an Aha Moment. But what is this kind of moment? It is often a true Moment of Discovery. And what’s that about? It can be a moment that is quite fun. It’s like a delightful surprise.

  On the other hand, if you dump a bunch of data and jargon on the investor, they may feel: “Oh. It’s just the same old thing. I’ve already heard nine other pitches that sound like this.”

  Become a master of the pitch. Be sure to use the power of the Moment of Aha … the Moment of Discovery.

  Get research to paint the picture

  Often novice company founders fall into a default setting of self-protection. How? By using a bunch of research to make their point. They’re trying to disarm anyone who would ridicule what they’re saying.

  Certainly, we want to use science, data and verifiable evidence to make our points. However, if you use too much material, you will lose the attention of the investor.

  Realize that you need to pick the most important item of data. Then use that datapoint to paint a picture in the investor's mind. You can use a word picture—that’s the process of using a few words to create an impression/image in the investor's mind.

  Nurture If-Then Patterns

  Often, an investor will say, “Sure. Send me your slide deck.”

  This is progress. But it’s also an invitation into a big competition.

  Your slide deck competes with everything else going on for the investor’s life—phone calls, other deals and more.

  Your solution is to think things through with If-Then Patterns.

  When the investor looks at your first slide, questions rise in their mind.

  So, we’re talking about, IF they have a particular question, THEN you have a compelling answer.

  The idea is for the first slide to answer the most vital questions.

  While delivering my workshop Convince Investors to Fund You in Bangkok, Thailand, I introduced the audience to the 6 Ws:

  What is it?

  What’s the Big Idea?

  Who’s it for? … Who benefits?

  Why should I listen to you?

  What’s in it for me as an investor?

  What does this disrupt?

  Be Careful About the Choice of Using “FOMO”

  I’ve had clients say to me, “We should use FOMO to grab the investor’s attention.” FOMO is fear of missing out. FOMO is like a scalpel—a tool that can be used for great good or great harm. Be careful of this technique. Investors can see right through FOMO, and you could break rapport with them.

  When talking to venture capitalists, I’ve heard them say, “I missed out on being an early investor in [Tesla, Facebook, Airbnb, and so on.]”

  So, how do we tap into their concern about missing the next big thing?

  As I work with a client, I frequently do what I call a Solo-Reflection Session. During that time, I am alone and I’m thinking about how I can help and guide the client to move forward faster. I also access my intuition during a Solo-Reflection Session.

  Recently, during my Solo-Reflection session, I sent an email to a client with this material:

  “During my Solo-Reflection session about your company, I was thinking about your comment about invoking FOMO—of course, fear of missing out.

  The essence of that process is to use a comparison and imagery on the slide that is undeniable and visceral.

  Similar to how we have different colored slide-decks for the level of the investor, we can use a number of different FOMO slides.

  What do you think and feel would be the undeniable and visceral components for ...

  the sustainability-compelled investor?

  any other impact investor?

  the “big opportunity” investor?

  the “I like to brag” investor?

  the “I am so savvy” investor?”

  Be careful about FOMO. Any investor might become irritated if they think you’re being manipulative.

  As I mentioned, FOMO is like a scalpel. It’s a tool that can do great good or great harm. Make sure you’re ready to deescalate the situation by saying something like: “Forgive me. I was just so excited about ____. Could we back up a few steps?”

  A Word about “Using Techniques”

  One can torpedo a good interaction with an investor by using a technique in a clumsy manner. Some people are deeply concerned about using any technique because they want to avoid coming across as “slick and phony.”

  My response is: Techniques are like a language. It’s valuable to learn the vocabulary of communication that creates connection.

  When I was recently in Thailand to give workshops (Convince Investors to Fun You and Power Time Management: More Time Less Stress, Zero Procrastination), I learned some Thai words. Women use the word “ka” which shows respect and politeness. Men use a different word that also begins with a “k.”

  My point is: It’s great to know techniques like it’s great to know vocabulary.

  Here’s what counts: Start with a positive intention. Be sure that you will make your offering into a great value for the investor, too.

  Danielle Strachman gives us some insights about being careful of FOMO and the use of other techniques …

  Interview with Danielle Strachman

  Tom: When somebody makes a pitch, what is crucial for them to do?

  Danielle: For 1517, I think we operate a bit differently than other venture funds. One of the things I would say is crucial about making a pitch is that it’s really about building a relationship with an investor. Often, when we’re working with a founder, since we work with students a lot, it’s really more about getting to know the person.

  I often say, “A founder will pitch to us when the time is right. But often, we’ve worked with that founder for months or even years in helping to mentor them and give them some advice on what they’re doing.”

  It’s important in a formal pitch to have thought out all the key areas, but even better is to build a relationship with the person they’re going to pitch to. Understand the firm and what their interests are, and really find that alignment. Because you don’t want to pitch to a group and find out—“Oh, you only do B2B SAS, and I’m Consumer.”

  We all have limited time and energy, so you want to make sure you’re f
ocused in the right places, with the right people. Avoid thinking that this is an investor and it’s going to be an automatic fit.

  Be sure to get to know the firm, find out what their thesis is, how you fit with that. Keep drawing back to these details in your pitch, because it’s about strategic partnership.

  Tom: When people are getting to know each other, what helps to build the relationship—and trust?

  Danielle: I feel mission alignment is really important. So, if you’re working on something that is also important to the other person, this is something that garners the building of the relationship.

  Trust is garnered over time. One reason we do a lot of relationship building at 1517 is that anybody can have three good meetings with somebody—in the span of a couple of weeks. This may be what people are used to, when thinking about doing a pitch. But trust comes in when you work with someone over time and you can see: “Hey, this founder or VC—it goes in both directions—did what they said they were going to do. They added value in this way.”

  We notice if a found owns to when their expectation of goals they would hit fell a bit short. That’s really how you build that trust.

  You get to see how people work over time—and how much their word matches up with what is actually happening.

  Tom: What is a mistake that one might make when building a new relationship with an investor?

  Danielle: Going back to what you said about trust. One of the meta-things we look at is how a founder drives the process if they’re looking to close out in a week or a month.

  For example, we had a team that we went into diligence with. This team was working on a very interesting problem. Due diligence was going great. We did a customer call—that was wonderful.